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Title Loans: The Pros And Cons
Title Loans: The Pros And Cons
Title Loans: The Pros And ConsA title loan is a loan that holds the title of your car as collateral. That way if you cannot pay back the loan, the lender will have an asset (your car) to sell and will therefore, be able to get their money back. Because the lender is holding your car as collateral, a credit check is usually not needed. Therefore, the process of getting a title loan goes very quickly. However, because a credit check is usually not done for title loans, interest tends to be higher. The term of the loan is usually very short as well, so you do not have a long time to pay off the loan. However, if you need a loan very fast due to an emergency, a title loan may be perfect for you!
In the event of an emergency, or you need a loan super fast, a title loan will most likely provide that for you since, with your car as collateral and no credit check, you can have your loan in 15 minutes or less without any hassle! However, with a title loan, you will only be able to get as much money from your loan as the amount of money your car is worth to the lender since it is your car that the lender will be holding as collateral.
The way lenders typically decide the worth of your car is taking half of what the car would sell for since cars depreciate in value over time. Therefore, your loan amount will be limited to half the amount of what your car would currently sell for. Title loans are therefore great for needing a little more extra cash, but not so great for really expensive purchases for which you would need a very large loan for. The good news is that unlike lots of other types of loans, with title loans, you can easily get a loan for as little as 100 dollars if you need just a very small amount of extra cash.